Corn
Price action: December corn futures closed down 7 1/4 cents at $4.05 and near the session low.
Fundamental analysis: “Rain makes grain” has been the bearish theme in the corn market the past few weeks. World Weather Inc. today said good growing weather is expected to continue in the U.S. Midwest except in the southwestern Corn Belt, where steady drying is expected. Limited rain and periodic heat in the southwestern Belt “may stress some crops, but timely rainfall and less heat in most other Midwest areas should maintain a good environment for summer crop development,” said the forecaster.
USDA on Monday afternoon rated 68% of the corn crop as “good” to “excellent” and 9% “poor” to “very poor.” The weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), showed the corn crop improved 1.3 points to 374.8, which is 8.8% above last year’s corn CCI rating at the same time. Pro Farmer crop consultant Michael Cordonnier left his corn yield and production forecasts at 181.5 bu. per acre and 14.97 billion bu., respectively.
A drop in crude oil futures prices to a six-week low today was a bearish “outside-market” element that limited speculator buying interest across the grain futures market spectrum.
Technical analysis: The corn futures bears have the solid overall near-term technical advantage. Still, the recent sideways and choppy price action begins to suggest a market bottom is in place. The next upside price objective for the bulls is to close December prices above solid chart resistance at the July high of $4.26 1/2. The next downside target for the bears is closing prices below chart support at the contract low of $4.03. First resistance is seen at this week’s high of $4.13 and then at $4.16 1/2. First support is at $4.03 and then at $4.00.
What to do: Get current with advised sales.
Hedgers: You should be 60% sold in the cash market on 2023-crop.
Cash-only marketers: You should be 60% sold on 2023-crop.
Soybeans
Price action: November soybeans fell 18 1/4 cents to $10.21 1/4, marking a fresh 3 1/2-year low close. December soymeal closed $5.50 lower at $318.00, near the session low. September soyoil showed relative strength, rising 13 points to 42.71 cents and forging a high-range close.
Fundamental analysis: Soybeans continued to edge lower today as technical pressure continues to curb buying interest, though losses were limited by technical support at Monday’s low. Crop conditions throughout the U.S. continue to prove above average, as USDA reported the crop as 67% “good” to “excellent” in its weekly Crop Progress Report on Monday, while the “poor” to “very poor rating was unchanged at 8%. Blooming continues to advance steadily, at an estimated 77%, while 44% was setting pods, both ahead of the five-year average. Meanwhile, crop consultant Dr. Michael Cordonnier maintained his 2024 U.S. production forecast at 4.39 billion bu., using a 52. bu. per acre yield. Cordonnier noted a neutral to slightly higher bias going forward but reiterated that while the crop is entering its crucial growing period under generally good conditions, rainfall during the month of August will be important in determining yields.
Moreover, uncertainties loom around planted and harvested acreage amid persisting rains, especially in the northwestern Corn Belt, which likely increased prevent plant and acreage switches, though that picture will become clearer after the Farm Service Agency releases certified acres, which will be incorporated into USDA’s upcoming Crop Production Report, due out Aug. 12.
World Weather Inc. notes good weather is expected to persist in the Midwest, though drying is expected in the southwestern Corn and Soybean Belt and the Delta, where steady drying is expected. Hot temps are expected in the middle and lower Missouri River Valley today and Wednesday and again briefly next week before cooler air spreads into the region. Limited rain and periodic heat in the southwest may stress some crops, but timely rainfall and less heat in most other Midwest areas should maintain a good environment for summer crop development.
Technical analysis: November soybeans surprisingly held an inside range, with Monday’s low of $10.18 serving up initial support, which is backed by support at $10.07 1/2 and the psychological $10.00 level. However, initial resistance stood at Monday’s session high of $10.44 1/2, which is backed by resistance at $10.50 as well as the 10- and 20-day moving averages of $10.53 3/4 and $10.67 1/4. Bears will continue to firmly grasp the technical advantage until bulls are able to secure a close above last week’s high of $10.86 3/4.
December meal futures ended the session below the 20- and 10-day moving averages of $319.00 and $318.60, which will now serve as initial resistance. Meanwhile, initial support will serve at $313.80, then at $311.20 and the July 16 low of $306.70. However, an extension back above the 10- and 20-day moving averages will face additional resistance at $326.00, then at $328.60 and again at the 40- and 100-day moving averages of $333.40 and $346.10.
September soyoil ended the session fractionally higher trading a narrow range, limited by Monday’s high of 43.36 cents and low of 41.44 cents, which will continue to serve as initial resistance/support. Additional resistance stands at 44.38 cents, then at the 40- and 10-day moving averages, which have nearly converged around 45.13 cents, and again at the 100- and 20-day moving averages of 45.99 cents and 46.16 cents. Conversely, additional support lies at 40.54 cents, then at 39.64 cents.
What to do: Get current with advised sales.
Hedgers: You should be 75% sold in the cash market on 2023-crop. You should have 10% of expected 2024-crop production sold for harvest delivery next fall.
Cash-only marketers: You should be 70% sold on 2023-crop. You should have 10% of expected 2024-crop production sold for harvest delivery next fall.
Wheat
Price action: December SRW futures sunk 6 1/4 cents to $5.49 and settled near mid-range. December HRW futures fell 3 cents to $5.66 1/4 and closed nearer session highs. September HRS futures fell 7 cents to $5.84 1/2.
Fundamental analysis: Wheat futures continue to face volatile, undecisive low volume trade. December SRW futures traded within yesterday’s range as traders reversed yesterday’s gain. Some concerns persist around dryness in Russia and Ukraine, but so far the downside of the crop seems to be priced in and forecasts for rain and coolness have stifled concerns in the near-term. Russia continues to state that they have ample reserves and any hit to production will not affect exports given excess stocks to bridge the gap.
Concerns over dryness and heat persist in the Plains and the heart of Canada’s Prairies, stressing many crops that are filling and maturing, says World Weather Inc. Some rain is forecast in the northern Plains late this weekend and into next week as cooler air is likely to spread as well. Rain in the Canadian Prairies is unlikely to counter evaporation, leading to additional crop stress.
USDA reported 74% of the spring wheat crop as rated “good” to “excellent” and 4% “poor” to “very poor.” On the CCI, spring wheat dropped 1.3 points to 382.7. USDA pegged the spring wheat crop as 1% harvested. They estimated the winter wheat harvest as 82% completed.
Technical analysis: December SRW futures underwent resurgent selling pressure as bears continue to hold the near-term technical advantage. Initial resistance now stands at $5.55 1/2 and is backed by the 10-day moving average at $5.61 1/2. Bulls are seeking to hold support at yesterday’s contract low of $5.39 1/2 which sees little backing until $5.25.
December HRW futures posted a contract low early on though closed well off intraday lows. Resistance stems from the 10-day moving average at $5.76 with further strength seeking to overcome resistance at $5.88. Bulls are seeking to hold support at $5.62 which is reinforced by today’s contract low of $5.51 1/4.
What to do: You should have claimed profits on the 2024-crop hedges in July SRW futures. Wait on a corrective rebound to increase sales.
Hedgers: You should be 60% sold on 2024-crop in the cash market. You should also have 10% of anticipated 2025-crop production forward sold for harvest delivery next year.
Cash-only marketers: You should be 60% sold on 2024-crop. You should also have 10% of anticipated 2025-crop production forward sold for harvest delivery next year.
Cotton
Price action: December cotton rose 34 points to 69.55 cents, a near mid-range close.
Fundamental analysis: Cotton futures were able to pull off gains for a second straight day amid general strength across softs, while a fading U.S. dollar lent additional support. However, weakness in crude oil futures and equities combined with looming technical pressure limited more robust buying interest. Many traders are likely anticipating comments from Fed Chair Jerome Powell following the conclusion of this week’s FOMC meeting tomorrow, which will provide insight into future economic policy.
In its weekly Crop Progress Report, USDA pegged the cotton crop as 49% “good” to “excellent,” a four-percentage point drop from last week, while the “poor” to “very poor” rating rose four points to 22%. The Texas crop was rated 40% in the top two categories and 31% in the bottom two, down five points and six points, respectively. Meanwhile, 87% of the crop was squaring and 54% was setting bolls, both ahead of the five-year average.
World Weather Inc. reports western Texas and southwester Oklahoma will often be dry through the next two weeks and much of the showers that occur should not bring enough rain to do more than temporarily slow drying rates. The Blacklands, Coastal Bend and south Texas will be dry through much of the next two weeks with some infrequent and mostly light showers that should not bring enough rain to have a significant impact on cotton or soil conditions.
Technical analysis: December cotton notched higher, extending from recent oversold conditions, though technical headwinds remain, with a test to initial resistance at the 10-day moving average, currently trading at 69.91 cents, proving futile. However, initial support at 68.90 cents, which is backed by support at 68.36 cents and last week’s low of 67.50 cents limited selling efforts. An extension of this week’s gains will face additional resistance at the 20- and 40-day moving averages of 70.68 cents and 71.84 cents.
What to do: Get current with advised sales.
Hedgers: You should be 90% sold in the cash market on 2023-crop. You should also have 25% of expected 2024-crop production forward sold for harvest delivery.
Cash-only marketers: You should be 90% sold on 2023-crop. You should also have 25% of expected 2024-crop production forward sold for harvest delivery.